Correlation Between Siemens Energy and Eaton PLC
Can any of the company-specific risk be diversified away by investing in both Siemens Energy and Eaton PLC at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Siemens Energy and Eaton PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Siemens Energy AG and Eaton PLC, you can compare the effects of market volatilities on Siemens Energy and Eaton PLC and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Siemens Energy with a short position of Eaton PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Siemens Energy and Eaton PLC.
Diversification Opportunities for Siemens Energy and Eaton PLC
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Siemens and Eaton is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Siemens Energy AG and Eaton PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton PLC and Siemens Energy is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Siemens Energy AG are associated (or correlated) with Eaton PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eaton PLC has no effect on the direction of Siemens Energy i.e., Siemens Energy and Eaton PLC go up and down completely randomly.
Pair Corralation between Siemens Energy and Eaton PLC
Assuming the 90 days horizon Siemens Energy AG is expected to generate 2.02 times more return on investment than Eaton PLC. However, Siemens Energy is 2.02 times more volatile than Eaton PLC. It trades about 0.08 of its potential returns per unit of risk. Eaton PLC is currently generating about 0.11 per unit of risk. If you would invest 1,729 in Siemens Energy AG on August 29, 2024 and sell it today you would earn a total of 3,426 from holding Siemens Energy AG or generate 198.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Siemens Energy AG vs. Eaton PLC
Performance |
| Timeline |
| Siemens Energy AG |
| Eaton PLC |
Siemens Energy and Eaton PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Siemens Energy and Eaton PLC
The main advantage of trading using opposite Siemens Energy and Eaton PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Siemens Energy position performs unexpectedly, Eaton PLC can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Eaton PLC will offset losses from the drop in Eaton PLC's long position.| Siemens Energy vs. SPX Corp | Siemens Energy vs. Nuscale Power Corp | Siemens Energy vs. Vestas Wind Systems | Siemens Energy vs. Nordex SE |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Global Correlations module to find global opportunities by holding instruments from different markets.
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